Report Indicts Health, Financial, Religious and Other
Sensitive Policies as “Trade Barriers” to be Eliminated, Spotlighting
Contentiousness of TPP Negotiations

The Obama
administration released this week a report that takes aim at a litany of
sensitive domestic policies in countries currently negotiating the
Trans-Pacific Partnership (TPP), identifying the policies as “trade barriers” that
the United States seeks to eliminate. The target list of TPP nations’ domestic policies, published in
the 2013 National Trade Estimate Report by the Office of the U.S. Trade
Representative (USTR), offers unusual insight into why negotiations over the
sweeping, 11-nation deal are contentious and have repeatedly missed deadlines
for completion, said Public Citizen today.

The 406-page USTR report indicts a
wide array of public health policies, financial regulations, politically sensitive
manufacturing and agricultural policies and even religious standards as “trade barriers”
that should be dismantled. USTR levies such criticism against policies in all
current and prospective TPP negotiating parties, including New Zealand’s
popular health programs to control medicine costs, an Australian law to prevent
the offshoring of consumers’ private health data, Vietnam’s post-crisis
regulations requiring banks to hold adequate capital, and Canada’s standards
requiring cheese to be made from milk.

For Malaysia, a predominantly Muslim
country, the USTR report admonishes the government for “requiring that slaughter
plants maintain dedicated halal facilities and ensure segregated transportation
for halal and non-halal products.”
Instead, the report suggests that the government should conform its
notions of Islamic meat-processing requirements to those established by Codex
Alimentarius, an international food standards body at which multinational food corporations
play a central role. USTR also takes issue with restrictions on importation of
pork and alcohol in this TPP negotiating country where three out of every five consumers
are Muslims.

“Even before the Obama administration’s
not-so-diplomatic target list of other countries’ domestic policies, the Trans-Pacific
Partnership was on rocky ground, with negotiators from many countries rejecting
U.S. demands to expand patent monopolies for foreign pharmaceutical
corporations and to subject their financial, health and environmental policies
to foreign investor challenges before international tribunals empowered to
order government compensation,” said Lori Wallach, director of Public Citizen’s
Global Trade Watch. “By openly listing the domestic policies in other TPP
countries that it wants dismantled, the Obama administration can only intensify
growing public concern about the TPP in these countries.”

USTR reserves some of its most
detailed policy critiques in the National Trade Estimate Report for Japan,
which recently announced its intent to join the TPP negotiations. The report
devotes 16 pages to castigating food labeling policies for providing too much
information to consumers, outlining how exactly the country should restructure
its public insurance system, urging the government to grant tax benefits to
foreign universities, and bemoaning Japan’s preference that its military
equipment be made domestically. (The United States has similar rules on
military procurement.)

The report also takes aim at Japan’s
agricultural policies, recommending, for example, the weakening of protections
for domestic rice farmers because “Japanese consumers would buy U.S. high
quality rice if it were more readily available.” The political party of
Japanese Prime Minister Shinzo Abe, backed by powerful farmer groups, has approved
a policy position that would require the country to exclude rice, wheat and
barley, beef and pork, sugar and dairy products from tariff eliminations in the
TPP. In contrast, the USTR report explicitly names all but one of these sensitive
sectors (sugar) as high-priority targets for liberalization.

For several TPP countries, USTR’s
National Trade Estimate Report encourages the adoption of copyright enforcement
measures akin to those proposed under the Stop Online Piracy Act (SOPA) that
was defeated in the U.S. Congress. For example, the report notes that the Obama
administration “has also urged Chile…to amend its Internet service provider
liability regime to permit effective action against any act of infringement of
copyright and related rights.”

When addressing some TPP countries,
the USTR report accuses national governments of broad corruption or even
incompetence. For example, the report states that two of Peru’s three federal
branches of government lack the “impartiality” or “expertise” required to fulfill
their responsibilities.

USTR also chooses to mount public criticisms
against TPP countries for “trade barriers” that are so specific in definition
and trivial in consequence as to seem motivated by comically narrow U.S. corporate
interests. For example, the report lambasts Singapore’s import restriction for
“non-medicinal chewing gum,” Canada’s high tariff on “breaded cheese sticks,”
and Peru’s refusal to import “cars over five years old.”

Among the report’s hundreds of pages,
the following commentaries on TPP countries are some of the most revealing:

USTR cites Vietnam’s “new regulations aimed at
improving the capital position of the banking industry” as a new form of trade
restrictions. The report particularly blames new capital adequacy requirements
for causing “difficulties” for banks.

The report targets Vietnam’s ban on the shipment
of certain products through the country en route to other destinations. These
“barriers to trade” include restrictions on the trans-shipment of “hazardous
waste items,…frozen animal by-products, and offal.”

The report states that the “United States
continues to urge Vietnam to undertake more aggressive actions to combat the
rising problem of intellectual property infringement, including digital piracy.”
Such urging, according to the report, has produced initial government conversations
with Internet service providers about cracking down more on content that
“rights holders” (e.g. U.S. media corporations) see as infringements – a key
component of the Stop Online Piracy Act (SOPA) defeated in the U.S. Congress.

The report concludes its remarks on Vietnam by
casually and categorically accusing the country of “widespread official
corruption and inefficient bureaucracy.”

Despite praising Singapore for having “the
second lowest rate of software piracy in Asia,” the report still alleges that
the country has “insufficient deterrent penalties for end-user software.”

The report notes that despite Singapore’s
increasing allowance for foreign ownership of domestic banks, “Singapore has
indicated that it will not allow foreign controlling stakes or takeovers of its
three major local financial institutions.” That is, the report lists
Singapore’s unease with foreign takeovers of its most critical banks as a
barrier to trade.

The report bemoans the fact that most “foreign
law firms with offices in Singapore cannot practice Singapore law…” The report takes note of the fact that even
when permitted to practice law in Singapore, foreign law firms are not allowed
to litigate in Singapore’s courts based on their understanding of Singaporean
law.

The report singles out Singapore’s taxes on
alcohol, tobacco and motor vehicles, noting that they are imposed “for social and/or
environmental reasons.” While USTR does not explicitly call for the dissolution
of these taxes, it apparently finds cause to highlight the measures in a report
devoted to unwelcome trade barriers.

USTR levies a series of blanket accusations
against the Peruvian government, lambasting two of the three federal branches.
The report plainly states, “Both U.S. and Peruvian firms remain concerned that
executive branch ministries, regulatory agencies, the tax agency, and the
judiciary often lack the resources, expertise, or impartiality necessary to
carry out their respective mandates.” The report gives no further arguments to
support the unabashed questioning of the federal government’s fairness and
competency.

USTR notes that a data privacy law in Peru “has
caused concern among companies dependent on cross-border data flows.” Those
companies, according to the report, are particularly concerned about Peru’s
requirement that consent must be obtained from Peruvians before acquiring their
confidential information.

The report cites Peru’s disinterest in U.S. used
goods as a trade barrier, “including used clothing and shoes (except as
charitable donations), used tires, cars over five years old, and heavy trucks
(weighing three tons or more) more than eight years old.”

USTR channels “strong concerns” regarding the
Pharmaceutical Management Agency (PHARMAC), the New Zealand government agency
that administers the country’s successful medicine cost-containment policies.
These concerns, the report notes, come from “U.S. stakeholders,” – that is,
U.S. pharmaceutical companies who have long opposed New Zealand’s programs to
contain medicine costs. USTR accuses PHARMAC of not providing these
“stakeholders” with adequate “transparency, timeliness, and predictability.” In
addition, the report takes issue with the fact that PHARMAC is expanding its
cost containment policies into sectors, such as medical devices, that
previously went “unregulated.”

The report notes that “rights holders” (e.g.
U.S. media corporations) are somewhat supportive of New Zealand’s new law to
crack down on allegations of online copyright infringement. But the report then
expresses annoyance with the fee that U.S. media conglomerates have to pay
under the law to take action against an alleged infringement. The onerous fee
required is $21.

The first investment barrier cited by the report
is that “Mexico’s oil and gas sector remains largely closed to private
investment…” USTR acknowledges that this is because “the Mexican constitution
mandates state ownership of hydrocarbons.”

USTR sees fit to spotlight the Mexican laws that
prohibit “foreign ownership of residential real estate within 50 kilometers of
the nation’s coasts.” The report frames the inability of U.S. citizens to buy
up Mexico’s coastland as an “investment barrier.”

The report offers Mexico unsolicited advice for
how to change its government procurement policies, including a recommendation
that state-level procurement transparency standards be “harmonized…to avoid
corruption and foster competition.”

The report admonishes the government of this
predominantly Muslim country for “requiring that slaughter plants maintain
dedicated halal facilities and ensure segregated transportation for halal and
non-halal products.” Instead, the report
suggests that the government should conform its notions of Islamic meat
requirements to those established by Codex Alimentarius, an international food
standards body at which multinational food corporations play a central role.

USTR also takes issue with Malaysia’s
restrictions on importation of pork and alcohol, products traditionally
forbidden for the three out of every five Malaysians who are Muslim.

The report states, “the U.S. Government
continues to raise concerns about the procurement process in Malaysia.” The
stated concern is that “Malaysia has traditionally used procurement to support
national public policy objectives.” The particular objectives provoking USTR consternation
include “encouraging greater participation of bumiputera [ethnic Malays and
indigenous groups] in the economy, transferring technology to local industries,
reducing the outflow of foreign exchange, creating opportunities for local
companies in the services sector, and enhancing Malaysia’s export capabilities.”

The United States has, according to the report,
“urged Chile…to amend its Internet service provider liability regime to permit
effective action against any act of infringement of copyright and related
rights.” Similar provisions were soundly rejected by the U.S. public and
Congress as part of the ill-fated Stop Online Piracy Act (SOPA), due to widespread
concern that the provisions would enable a sweeping crackdown on user-generated
content, stifling innovation and restricting Internet freedom.

The report conveys concerns of the U.S.
pharmaceutical industry, mentioning the Notice of Intent filed last year by
U.S. pharmaceutical corporation Eli Lilly, in which the company announced plans
to use NAFTA’s investor privileges to directly challenge Canada’s entire patent
policy. This investor-state attack was launched in response to Canadian courts’
invalidation of a patent on an Eli Lilly medicine for which the firm had not
met Canada’s patentability standards. USTR also notes another recent patent
invalidation – for Pfizer’s Viagra – that has yet to produce a NAFTA
investor-state case. USTR’s inclusion of these cases could be intended to
provide political backing for the U.S. corporate challenges to Canadian patent
law, which have generated wide-spread consternation among public health
officials.

The report takes issue with Canada’s policy that
major foreign investments and acquisitions must be reviewed to ensure that they
offer a “net benefit” to the country. This standard, according to USTR, is
“overly broad.”

USTR laments that Canadian provincial policies
to control alcohol distribution “greatly hamper[] exports of U.S. wine and
spirits to Canada.” The report particularly blames “province-run liquor control
boards,” which enact policies closely resembling those used by U.S. state-level
counterparts, such as the Pennsylvania Liquor Control Board.

After describing a Canadian project to
consolidate a wide array of federal government data, the report criticizes a
stipulation that companies involved in the consolidation will not be permitted
to move the government data outside of Canada. USTR implies that the Canadian
government should not have qualms with the offshoring of a wide range of
government data because doing so aligns with “today’s information-based economy.”

The report blasts Canada’s popular supply
management program for sensitive dairy and poultry products. While the program
provides support and stability to Canadian farmers, USTR explains that it
“severely limits the ability of U.S. producers to increase exports to Canada…”

USTR singles out one item as an illustrative
example of U.S. “dairy products” that have been particularly impaired by
Canada’s import barriers: “breaded cheese sticks.”

The report disparages Canada’s “compositional
standards for cheese,” which USTR blames for blocking U.S. “dairy” products
from being sold in Canada. The primary standard that USTR cites as concerning
is Canada’s establishment of “a minimum for raw milk in the cheese making
process.”

USTR expresses frustration with Australia’s
resistance to the offshoring of its citizens’ private data to foreign countries
via cloud computing and offshore storage. The report particularly singles out
Australia’s new law barring offshore storage of confidential health records.
USTR urges “a risk-based approach to ensuring the security of sensitive data as
opposed to a geographical one.” However, the same paragraph notes that
Australia’s reticence is indeed based on risk, as the country “cites the U.S.
Patriot Act” as “presenting a legal and regulatory risk associated with cloud
computing.” U.S. lawyers have long expressed similar concerns – that the
Patriot Act threatens the data privacy of U.S. citizens. The report does not
attempt to defend the Act.

In its remarks on Australia, the report devotes
an entire section to “Blood Plasma Products and Fractionation.” In no unclear
terms, the report states, “The United States remains concerned about the lack
of an open and competitive tendering system for blood fractionation in
Australia.” USTR apparently would like U.S. companies to have an equal chance
to separate the blood of Australian citizens.

The report expresses disapproval of Japan’s food
labeling policy, which “mandates that all ingredients and food additives be
listed by name along with content percentages, and include a description of the
manufacturing process.” In a time when consumers are demanding ever more
information about the products they consume, USTR complains that Japan’s
progressive labeling policy is “burdensome” and “risks the release of
proprietary information to competitors.”

The report is careful to state that “the U.S.
Government remains neutral as to whether Japan Post [a state-owned postal,
banking and insurance conglomerate] should be privatized.” Still, USTR makes
clear that “the U.S. Government continues to monitor carefully the Japanese
government’s postal reform efforts.” USTR further clarifies that such
monitoring is far from “neutral,” stating that the U.S. government will
continue “to call on the Japanese government to ensure that all necessary
measures are taken to achieve a level playing field between the Japan Post
companies and private sector participants in Japan’s banking, insurance, and
express delivery markets.” Thus, while USTR respects Japan’s decision over
whether its single largest public entity should be privatized, USTR is eager to
remind Japan that the entity should be stripped of the standard preferential
treatment that governments typically channel through public entities to benefit
consumers.

USTR chastises Japan for not opening all of its
military procurement contracts to foreign companies. The report expresses
annoyance for Japan’s “general preference” that “defense products and systems
be developed and produced in Japan.” National security arguments apparently
have no standing “when a foreign option exists that could fulfill the
requirements more efficiently, at a lower cost…” (Unless those arguments are
made in the United States – U.S. Buy American laws cover military procurement.)

According to the report, the U.S. government is
“urging[] the Japanese government to work with foreign universities to find a
nationwide solution that grants tax benefits comparable to Japanese schools.”
Why should the government provide private, foreign universities the same sort
of tax breaks that it affords to Japan’s own schools? According to USTR,
meeting this rather anomalous request is necessary for the foreign schools “to
continue to provide their unique contributions to Japan’s educational
environment.”

USTR accuses Japan’s government of using policy
advisory groups that are too often “opaque,” noting that “nonmembers are too
often not uniformly offered meaningful opportunities to provide input into
these groups’ deliberations.” The critique mirrors, nearly word for word,
criticisms levied against USTR itself for administering a non-transparent and
exclusive official trade advisory system comprised almost entirely of corporate
representatives. USTR continues by urging Japan “to ensure that ample and meaningful
opportunities are provided for all interested parties, as appropriate, to
participate in, and directly provide input to, these councils and groups.” U.S.
stakeholder groups have continually made the same recommendation to USTR to
open the closed-door trade advisory system, though “meaningful” changes have
yet to be seen.

USTR takes aim at Japan’s politically sensitive
rice import policies, calling them a “highly regulated and nontransparent”
system that “limits meaningful access to Japanese consumers.” The report
laments that most U.S. rice under the system does not reach Japanese consumers,
and argues that they “would buy U.S. high quality rice if it were more readily
available.” To substantiate this claim of Japanese consumers’ unrealized
preference for U.S. rice, the report cites “industry research.”

In quick succession, the report individually
targets Japan’s policies on rice, wheat, beef, pork and dairy products, taking
issue with tariffs, quotas, and state distribution systems. These targeted agricultural
sectors are among the most politically sensitive in the country, and have been
named by Japan’s ruling Liberal Democratic Party as sectors that must be
excluded from tariff eliminations in the TPP.

Consider that Australia has apparently developed some very good solar energy technology, but the USA will not allow Americans to import it because of policies that protect the less developed American big money brand name investments. It would be interesting to see the full list of items that the United States refuses to accept as "fair and open" free trading markets on an even playing field.

"....international tribunals empowered to order government compensation,..."
This essentially is a virtual international corporate "Charter Government"

...bi-lateral trade agreements between corporations and governments have a bad history. Now a sweeping corporatist multilateral exploit that reeks of colonialistic domination is setting up a "free trade" manifesto for deregulated capital flow trade interests while inhibiting capital flight controls and the right to self preservation from unforeseen damages or abuses as perceived by legitimate authority in that state or nation. This is just a new chapter in neo-con corporate raiding on a global scale.

This review of international "deregulation" is (in my mind) a methodology to get these economies primed and exposed all on the same playing field. The language of "HARMONIZATION" is the current phrasing for what was unfettered "liberalization" in the past three decades progressively. Of course most of the real "predator" ABUSE of "liberalization" came from what would probably quantitatively and qualitatively be discovered as a thick and densely packed back room of financial empire building "nationalists" ...(really anarchistic capitalists)...they always shift to whatever "opportunistically" fits their agenda and whose real loyalty and interests lie well preserved in offshore tax havens.

According to the report, the U.S. government is “urging[] the Japanese government to work with foreign universities to find a nationwide solution that grants tax benefits comparable to Japanese schools.” Why should the government provide private, foreign universities the same sort of tax breaks that it affords to Japan’s own schools? According to USTR, meeting this rather anomalous request is necessary for the foreign schools “to continue to provide their unique contributions to Japan’s educational environment.”

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Eyes on Trade is a blog by the staff of Public Citizen's Global Trade Watch (GTW) division. GTW aims to promote democracy by challenging corporate globalization, arguing that the current globalization model is neither a random inevitability nor "free trade." Eyes on Trade is a space for interested parties to share information about globalization and trade issues, and in particular for us to share our watchdogging insights with you! GTW director Lori Wallach's initial post explains it all.

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